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Institutional Investor Sentiment Soars as BlackRock Bitcoin ETF Prospects Strengthen

BlackRock’s Bitcoin ETF Bid Helps Stem Crypto Fund Outflows

Last week, investors withdrew $5.1 million from digital asset funds, according to a report from CoinShares. While still an outflow, this represents a significant decrease compared to the previous week’s $88 million outflow. The recent outflows mark the ninth consecutive week that investors globally have sought to reduce their exposure to digital assets.

The decrease in outflows can be attributed to BlackRock’s Bitcoin exchange-traded product (ETP) bid. When news broke that BlackRock, one of the world’s largest asset managers, had applied for a Bitcoin ETP in the US, there were $5 million in inflows. Although these inflows were not enough to offset the earlier outflows, they indicate a potential shift in investor sentiment.

Grayscale, the fund manager behind the Grayscale Bitcoin Trust (GBTC), accounted for over 85% of the weekly inflows. The company has been striving to convert its flagship fund into a coveted spot Bitcoin ETF. As a result, GBTC saw a nearly 13% increase in shares, closing at $15.12 per share.

Altcoins & America

While Ethereum funds experienced significant outflows, with $5 million being withdrawn, investors showed interest in certain altcoins. XRP saw inflows of $1.1 million, Cardano received $0.6 million, and Polygon had $0.2 million invested. Over the past month, XRP has gained 4.7%, partially driven by the release of documents related to a former SEC director’s speech. However, both Cardano and Polygon have faced SEC lawsuits, resulting in respective losses of around 17% and 31% in the past month.

The Federal Reserve’s hawkish statements regarding potential rate hikes have also added to the cautious investor sentiment. Despite these challenges, US investors deposited $3.7 million into digital asset funds last week, followed by Germany with $2.7 million. In contrast, investors in Sweden and Switzerland pulled $3.3 million and $5.8 million from these funds, respectively. Hong Kong, which is experiencing a regulatory climate for crypto, has not seen significant inflows this year.

Conclusion: Crypto Fund Outflows Ease Amid BlackRock’s Bitcoin ETF Application

Although investors continue to withdraw from digital asset funds, the rate of outflows has slowed down. This can be attributed to the news of BlackRock’s Bitcoin ETP bid, which garnered some inflows but was not enough to offset the overall outflows. The market remains cautious due to regulatory pressures and the Federal Reserve’s signals of potential rate hikes. However, the interest in altcoins and the influx of funds from certain regions indicate that investor sentiment is not entirely bearish. The coming weeks will determine whether the trend of reduced outflows continues as more clarity emerges regarding regulatory frameworks and market conditions.